Dive Brief:

• More than 2,100 MWh of energy storage systems came online in the U.S. in the fourth quarter of 2020, marking a 182% increase over the previous quarter and setting a new record for the industry, according to a report from Wood Mackenzie and the U.S. Energy Storage Association (ESA).
• In total, 1,464 MW/3,487 MWh of new storage came online in the country last year — 179% more than 2019 in MW terms — and the report estimates that the storage market will deploy five times more MW in 2025, with front-of-the-meter systems continuing to comprise a bulk of that growth.
• Deployments in 2020 surpassed the 3,115 MWh of storage collectively installed from 2013 to 2019, Dan Finn-Foley, head of energy storage at Wood Mackenzie noted in a press release. "This is the hallmark of a market beginning to accelerate exponentially, and momentum will only increase over the coming years," Finn-Foley added.

Dive Insight:

2020 was the first year that advanced storage deployments surpassed gigawatt scale, Jason Burwen, interim CEO of ESA said in the press release, adding that the sector is on an accelerating trajectory due to continuing cost declines, growing policy support and state as well as federal regulatory reform. 

The previous record set by the industry was in the third quarter of 2020, when 476 MW of storage resources were deployed in the country. In a previous report announcing the record, Wood Mackenzie and the ESA estimated that the storage market would grow sixfold, to almost 7.5 GW and a $7.3 billion annual market by 2025, driven largely by large-scale utility procurements. 

The power sector is in general approaching storage as an immediate possibility, rather than an option for the future, Ashley Wald, a partner with the law firm Holland & Hart, told Utility Dive when the previous record was set. And the sector could continue on its growth trajectory, especially with the new Biden administration.

"This is a moment when things can really go in a different direction. Where the industry has been thriving over the last several years, now it really can take off in a way it couldn't have before, because it will have the administrative support," Wald said in December. 

Front-of-the-meter storage comprised 4 out of every 5 MW deployed in the fourth quarter of 2020, contributing 529 MW of the 651 MW that were installed, with California leading in deployments. 

Residential projects, meanwhile, comprised 14% of MWs deployed in Q4 — a notable increase over the last three quarters, which the report identifies as being due in part to interest from California homeowners. While California led in residential storage deployments in 2020, Hawaii also saw some activity, and the report forecast growth in states in the Northeast, Midwest, mid-Atlantic and Southeast over the next few years. 

"[T]he ability of solar-plus-storage to provide backup is increasingly driving sales even in markets without additional incentives, particularly states that suffer from regular power outages. We expect an uptick in home battery sales in Texas in the aftermath of February’s devastating outages," Chloe Holden, energy storage analyst with Wood Mackenzie said in the press release.